Competition: CK Telecoms UK Investments challenges Hutchison 3G UK/ Telefonica UK merger decision

On 10 October 2016, the Official Journal published details of an action by CK Telecoms UK Investments ("the applicant"), the owner of Hutchison 3G UK ("Hutchison"), to challenge the Commission's decision to prohibit the proposed acquisition of Teléfonica UK ("Teléfonica") by Hutchison.

In May 2016, the Commission prohibited the proposed acquisition of Teléfonica's mobile network operator O2 by its rival Hutchison due to strong competition concerns raised in the United Kingdom mobile market. The proposed merger would have combined the second largest mobile network operator, Teléfonica's O2, with Hutchison's mobile network operator, Three. Three is the latest market entrant and is considered as an important driver of competition on the market. Thus the proposed merger would have created an entity with a market share of more than 40%. The remaining mobile network operator competitors in the United Kingdom are BT's Everything Everywhere ("EE") and Vodafone.

The applicant claims that the Commission erred in its interpretation and application of the legal test for assessing horizontal non-coordinated effects in the market for retail mobile telecommunications services in the United Kingdom. According to the applicant, the Commission further made manifest errors of assessment and distorted evidence. The applicant also claims that the Commission infringed essential procedural requirements. In particular, the applicant alleges that the Commission erred in its novel propositions concerning the necessity and extent of 'alignment' between competitors in network sharing agreements. Further, the applicant claims that the Commission erred in rejecting commitments offered by Hutchison that would have fully resolved all of the concerns relating to network sharing. According to the applicant, the Commission also erred in its assessment of horizontal non-coordinated effects arising in the wholesale market for access and call origination on public mobile networks in the United Kingdom. Finally, the Commission erred in its evaluation of the commitments offered by Hutchison in respect of concerns relating to the retail and wholesale mobile telecommunications markets in the United Kingdom. Source: Case T-399/16, Official Journal 2016 C 371/12, 10 October 2016

Competition: Pometon appeals Commission's steel abrasives cartel decision 

On 10 October 2016, the Official Journal published details of an appeal brought by the Italian abrasives producer, Pometon SPA ("Pometon"), against the Commission decision to impose a fine on Pometon for participating in a cartel to coordinate steel abrasives prices in Europe. Steel abrasives are loose steel particles used for cleaning or enhancing metal surfaces in the steel, automotive, metallurgy and petrochemical industries. They are also used for cutting hard stones such as granite and marble. Metal scrap, which is the main raw material for steel abrasives, is characterized by sharp price fluctuations and significant price differences among EEA countries.

In June 2010, the Commission opened an investigation, due to a leniency application by one producer, Ervin, and made unannounced inspections at the premises of five European producers of steel abrasives. The Commission's investigation showed that the cartel participants collectively established a specific surcharge based on a common formula to compensate for price fluctuations. In addition, the cartelists agreed not to compete against each other on price for individual customers. In April 2014, the Commission settled with four companies (Ervin, Winoa, Metalltechnik Schmidt and Eisenwerk Würth) that admitted their involvement in the cartel. Subsequently, the Commission imposed fines totaling approximately EUR 30.7 million on these four companies. Pometon chose not to settle and, consequently, the investigation continued according to normal cartel procedure. In December 2014, the Commission sent a statement of objections to Pometon, giving it the opportunity to exercise its rights of defense. In May 2016, the Commission fined Pometon approximately EUR 6.2 million.

Pometon claims that the Commission infringed its right to a fair trial, its presumption of innocence, and its rights of defense. Pometon argues that in its settlement decision the Commission had expressly ascribed to Pometon the same illegal conduct imputed to the other parties, before Pometon had been given the opportunity to defend itself against this allegation. According to Pometon, this undermined the Commission's ability to make a truly impartial decision. Pometon also claims that the Commission presented inadequate evidence that did not sufficiently establish Pometon's infringement. Further, Pometon claims that its alleged conduct did not have the object of restricting competition and that the fines were discriminatory and time-barred. Source: Case T-433/16, Official Journal 2016 C 371/20, 10 October 2016

Competition (Finland): Finnish Competition and Consumer Authority closes its investigation into SOK's loyal customer card scheme

On 11 October 2016, the Finnish Competition and Consumer Authority ("FCCA") announced that it has closed its investigation into the Finnish retailing cooperative organization, Suomen Osuuskauppojen Keskuskunta ("SOK") concerning SOK's loyal customer card scheme. According to the FCCA, there are no grounds to continue the investigation. The FCCA started the investigation in 2014, when Section 4a of the Finnish Competition Act entered into force. Section 4a concerns dominant positions in the daily consumer goods trade, according to which an undertaking or an association of undertakings with a minimum of 30 percent market share is deemed to be in a dominant position. SOK's market share in the Finnish daily consumer goods retail trade exceeds 30 percent. Since 1994 SOK has used a national discount system ("S-Group bonus system") linked to the usage of its loyal customer cards. According to this system, customers receive bonuses if they centralize their purchases within companies belonging to the S-Group. Based on the overall assessment of the market and SOK's discount system, the FCCA found that the S-Group bonus system does not limit competition in the relevant market. Accordingly, the FCCA closed the investigation. Source: Finnish Competition and Consumer Authority Press Release 11/10/2016 (in Finnish) and Finnish Competition and Consumer Authority Decision 11/10/2016 (in Finnish)

Merger control: Commission opens in-depth investigation into HeidelbergCement and Schwenk's joint acquisition of Cemex Croatia

On 10 October 2016, the Commission announced that it opened an in-depth investigation into HeidelbergCement and Schwenk's joint acquisition of Cemex Croatia. HeidelbergCement and Schwenk are both German construction material producers. Together they jointly control Duna Dráva Cement ("DDC"), a Hungarian company. Cemex Croatia is a subsidiary of the Cemex Group, also a global construction material supplier. HeidelbergCement and Schwenk plan to acquire, via their joint subsidiary DDC, assets in Croatia and Hungary that currently belong to Cemex.

The Commission has preliminary concerns that the proposed transaction may reduce competition for grey cement in Croatia. The proposed transaction would combine Cemex Croatia, the largest producer in the area, and DDC, the largest importer. The Commission's initial investigation indicates that the proposed transaction may remove a significant competitor from an already concentrated regional market. According to the Commission, the remaining actual or potential suppliers may exercise only limited competitive pressure on the merged entity because of transport costs to reach southern Croatia. Furthermore, the domestic cement suppliers Cemex Croatia and LafargeHolcim control all the cement terminals in ports along the Croatian coast. Therefore, the Commission has preliminary concerns that the transaction may strengthen the market power of Cemex Croatia in southern Croatia and raise prices for grey cement.

The Commission was notified of the proposed transaction on 5 September 2016. The Commission now has 90 working days, until 23 February 2017, to decide the matter. The opening of an in-depth investigation does not prejudge the outcome of the investigation. Source: Commission Press Release 10/10/2016

Merger control: Commission launches public consultation concerning EU merger control

On 7 October 2016, the Commission launched a public consultation on the functioning of certain procedural and jurisdictional aspects of EU merger control ("public consultation"). The public consultation will seek feedback from citizens, businesses, associations, public authorities and other stakeholders.

The background for the public consultation comes from the 2013 public consultation and a 2009 report on the functioning of the EU Merger Regulation, which both confirmed that in general the EU Merger Regulation works well. While no fundamental overhaul was needed, there appeared to be room for improvement in certain areas to make EU merger control simpler and more efficient.

The public consultation is part of the Commission's work to promote a consistent review of existing EU laws, so that EU policies achieve their objectives most efficiently, to the benefit of jobs and growth. It will focus in particular on (i) the effectiveness of purely turnover-based thresholds in the EU Merger Regulation; (ii) the treatment of cases that typically do not raise competition concerns; and (iii) the referral mechanisms between Member States and the Commission.

The public consultation will close on 13 January 2017. The received feedback will be fully published, unless respondents choose an anonymized publication of their responses or object to the publication. Source: Commission Press Release 7/10/2016 and Commission Consultation on Evaluation of procedural and jurisdictional aspects of EU merger control